Scrambling Stirs Up Dish-tv Industry

When Home Box Office started scrambling the satellite signals of its two movie channels a couple of months ago, it did more than jumble its electronic transmissions. It scrambled an entire industry.

Across the nation, the businesses that make, distribute, sell and install satellite television antennas saw sales plummet.

Potential customers apparently feared that scrambling would spread, robbing their back-yard ''dishes'' of their greatest attraction: free access to more than 130 channels of news, sports, commentary and entertainment from across the nation and around the world.

When HBO pulled the switch Jan. 15, it scrambled only four channels. But the practice is expected to spread to many other channels, thanks in part to pressure from the nation's powerful cable-TV operators, who rely on satellite programs like HBO to draw paying customers to their cable-TV systems.

As a result, dish owners eventually may have to pay monthly fees, as cable-TV customers do now, to view many of the programs they now pluck free from space; HBO already has said that it intends to exact fees from dish owners who want to continue receiving unscrambled versions of its movies.

The prospect of pay-to-see satellite TV has set up a confrontation between the fledgling dish industry and the entrenched cable-TV systems over who will control access to the scrambled, satellite-fed TV programs. It is a struggle that already involves Congress.

HBO's decision to scramble was no surprise; the company announced it four years ago and repeatedly publicized its $10 million effort to develop a workable scrambling system.

It undertook the project, it said, because thousands of hotels, motels, taverns and other businesses were using rooftop satellite antennas to capture HBO movies free of charge instead of buying and receiving the 24-hour entertainment channel from cable-TV systems.

The company said that, by scrambling both East Coast and West Coast satellite signals for HBO and its sister channel, Cinemax, it hoped to stem millions of dollars in losses from the unauthorized commercial use of its programming.

But until the picture actually was scrambled, no one had paid much attention to HBO's warnings. In the meantime, the number of satellite dishes had mushroomed from a few thousand to 1.3 million.

Last year alone, almost 700,000 dishes were sold, said Joseph R. Boyle, a spokesman for Satellite Television Industry Association Inc., a nationwide trade group. That generated about $1.5 billion in sales for an industry that hardly existed six years ago.

Since HBO scrambled its signal, however, sales everywhere have been down sharply, Boyle said.

Although nationwide figures for early 1986 are not yet available, Boyle said, individual dealers, distributors and manufacturers are reporting business drop-offs so severe that many are banding together for the first time to start regional and national publicity campaigns to counteract scrambling's effect.

For example, ARDCO Electronics Distributors, a wholesaler with annual revenue of $6 million, reported a large drop in sales of satellite-TV dishes and components in the month after scrambling.

''We have seen a significant effect in certain markets,'' said Kenneth N. Burns, sales manager of the San Jose, Calif., company. While sales in remote areas not served by cable television have remained strong, he said, sales in areas where cable service is available have fallen 30 percent to 40 percent.

Earlier this month, satellite-TV companies from throughout the nation organized a cross-country caravan to Washington to publicize their plight.

In Central Florida, more than three dozen dealers and distributors have formed a trade organization to educate the public about satellite-TV programming and to allay consumers' fears about scrambling.

Sally Melmige, who operates an Antenna Technology Inc. distributorship in Kissimmee, had been averaging more than $100,000 a month in equipment sales to dealers in Osceola and Orange counties. After Jan. 15, she said, her orders dropped by more than 75 percent.

Harold D. Mitchell, an Orlando dish dealer, said that last summer he was selling six to eight satellite-TV systems a week at his Mr. Satellite store.

''I used to have three or four couples drop in per day. I'd average a half-dozen calls -- that's 10 leads per day,'' Mitchell said. In the month after HBO's scrambling, he said, sales dropped to two or three a week -- barely enough for him to break even.

The sky was the limit for the dish industry in 1979, when the Federal Communications Commission deregulated satellite-TV reception. The agency abolished the requirement that a homeowner obtain an FCC license before erecting a back-yard dish.

The reaction was immediate: The number of dishes grew sixfold in one year, from 4,000 in 1980 to 24,000 in 1981.